Nothing is more needed from the Fed, than some modesty and humility.

Sir, Richard McGregor in “Acrimony grows over Fed chair decision” July 27, quotes Bob Corker, a Republican senator saying “but we’d like to have someone that shows more modesty, from the standpoint of what the Federal Reserve can do, relative to spurring our economy on”.

That is absolutely correct, after all these years with bank regulators arrogantly thinking they can play risk managers of the world and allow for different capital requirements for different bank assets based on ex-ante perceived risks, all without even thinking about how this distorts the markets, there is nothing we need more than modesty and humility in our financial bureaucracy.

Just look at how much resources have been spread out by the Fed’s quantitative easing programs without caring about the financial transmission channels being all fouled and plugged up by these regulations.

If only the Fed had heeded its dual mandate

Sir, Bob Corker, in “Bernanke should show some humility at the Fed” August 29, writes “A big part of the problem is that the US Congress has given the Fed an overly broad “dual mandate” of price stability and full employment… this approach…undermines the free market system” 

Although I agree that the free market has been undermined, in this case it happens to be precisely because the Fed ignored its mandate on full employment. Had it not done so, it could never ever have approved bank regulations that so overly discriminate against job creators, like small businesses and entrepreneurs, only on account of these being perceived as “risky”… and all that, in “the Home of the bBave” 

Frankly... what are the thickheaded bank regulators smoking?